Investment and political will needed to make Climate Action Bill a success

Posted on Monday, 29 March 2021
fossil fuel burn

The Climate Action and Low Carbon Development (Amendment) Bill 2021[1] will establish a legally binding framework with clear targets and commitments set in law, and ensure the necessary structures and processes are embedded on a statutory basis to ensure Ireland achieves national, EU and international climate goals and obligations in the near and long term.

Elements of the Bill are welcome and timely, in particular:

  • Placing the ‘national climate objective’ to achieve no later than 2050, the transition to a climate resilient, biodiversity-rich, environmentally-sustainable and climate-neutral economy on a statutory basis
  • Embedding and promoting the process of carbon budgeting
  • The provision that the first two five-year carbon budgets proposed by the Climate Change Advisory Council should equate to a total reduction of 51% emissions over the period to 2030
  • The requirement for local authority climate action plans

In order for the Bill to be successful clear targets and significant investment are required to ensure that Ireland meets its emissions reduction obligations. Ireland is still among the worst performing European Union (EU) countries on climate change according to the most recent Climate Change Performance Index[2].  Although we perform relatively well on renewable energy and energy use, we are the second worst performing EU country on greenhouse gas emissions. 

Government must clearly outline where the additional efforts and policies will come from to meet the commitments in the Bill and the commitments in the Programme for Government. 

There will be challenges in terms of how each sector will meet commitments and indeed how Government policies for various sectors work coherently.  For example, challenges relating to diverse objectives for the agriculture sector may be hard to resolve.  This is evident in the ‘Ag Climatise’ strategy[3] which while committing to an absolute reduction in the agricultural greenhouse gas inventory by 2030 sets no annual targets, and does not make any reference to the size of the national herd, which is a fundamental driver of agricultural emissions. 

For agriculture, improvements in production efficiency will not be enough to meet and the long-term trajectory for the livestock sector must be considered.  Continued support for the beef sector must be contingent on much stronger conditionality and essential income support for low-income farm households via the Common Agricultural Policy should be consistent with the green transition and emissions reduction ambitions. We must move away from the existing approach whereby the targets in our agricultural and food strategies serve to undermine the targets in our environmental policies. 

Transport is another area which faces challenging targets. Despite impact of Covid-19 restrictions in emissions from this sector in 2020, a significant amount of work needs to be done in order to reduce emissions.  The SEAI ‘Energy In Ireland 2020’[4] report outlines the challenges Ireland faces in reducing emissions from transport. Transport continues to dominate Ireland’s energy use, and transport energy use has increased by 25 per cent since 2012.  Heavy goods vehicles showed the strongest growth in energy use in transport in 2019, and electric vehicles made up just 0.3 per cent of the total private car stock. 

More attention needs to be paid to emissions outside of road transport. Emissions from aviation are not taxed directly. The Central Statistics Office (CSO) calculated that the exemption of jet kerosene from excise amounted to an indirect environmentally harmful subsidy of up to €626.5 million in 2018 . This is untenable. Ireland needs to support EU efforts to control emissions in aviation to prevent a return to the trend of increasing emissions.  Jet kerosene use increased by 1.2% in 2019 and is now greater than petrol use and air travel is now second only to private cars as a share of transport energy.  The time has come to look at the aviation sector and the policy levers that are available to ensure that it makes a contribution to our climate targets.  No sector can have a free pass, and with all other sectors being required to make a contribution to our climate targets the aviation sector should be no different.  Jet kerosene is currently not subject to Mineral Oil Tax, yet air travel is a significant polluter. In a first step to address this anomaly, and as part of a comprehensive carbon policy to meet our national targets for 2030 out to 2050, Social Justice Ireland proposes the introduction of a Commercial Air Transport Tax. This is in line with the ‘Polluter Pays’ Principle and the Environment Liability Directive. 

Subsidies are also an element of the environmental tax code that should be reviewed.  These subsidies mean that government has a wider fiscal space available to it in terms of climate policy and taxation.  Government can address climate challenges by removing those subsidies which are harmful rather than levying new environmental taxes or increasing the existing environmental tax rates/levels.  This gives additional budgetary space for Government when implementing and designing climate policy

The subsidising of fossil fuels by the Exchequer is completely at odds with the Fossil Fuel Divestment bill and the Climate Action Bill and is a further example of policy incoherence.  According to the latest data published by the CSO, €2.4 billion was not collected by the Exchequer due to direct subsidies and revenue foregone due to preferential tax treatment supported fossil fuel activities in Ireland in 2018[5]. This represents an increase of 8 per cent on the previous year.  The revenue foregone due to the excise duty exemption for jet kerosene used for domestic and international commercial aviation, which was €626.5 million in 2018. Between 2012 and 2016, €4 billion per annum in taxation was forgone through potentially environmentally damaging subsidies. €2.5 billion went in direct subsidies and preferential tax treatment supporting fossil fuel activities in Ireland and a further €1.6 billion supported other potentially environmentally damaging activities in the Agriculture, Transport and Fisheries sectors.  A study by the ESRI (2020)[6] found that budgetary cost of these subsidies was over six times higher than the entire carbon tax revenue of the Government in 2017. These subsidies mean that government has a wider fiscal space available in terms of climate policy.  Government can alleviate adverse climate change impacts by removing these subsidies rather than levying new environmental taxes or increasing the existing environmental tax rates/levels.  This is something that must be considered in budgetary terms when implementing and designing climate policy. 

The value of these subsidies is substantially higher than the allocation to Just Transition and biodiversity in Budget 2021.  By eliminating these harmful subsidies and investing in renewable energy and schemes to address energy poverty Ireland will be in a much better place to meet our energy targets. If Government is really serious about Ireland transitioning to a low carbon economy all subsidies for fossil fuels should be reviewed in 2021, with those which are harmful removed and the savings invested in renewable energy. 

Reducing emissions requires the implementation of policy decisions made in the interest of a sustainable future rather than short-term sectoral interests. While this implementation may be difficult in the initial stages, it will lead to reduced emissions and long-term benefits for all society. This is where our Government and all members of the Oireachtas must show leadership and act in the national interest.

Policy proposals that would assist Government delivering on its Green New Deal commitment, reducing emissions and a just transition are:

  • Set ambitious emissions reduction targets for 2030 and ensure sufficient resources to support implementation of these targets;
  • Adopt targets and a reporting system for each of the Sustainable Development Goals;
  • Integrate a Sustainable Development Framework into economic policy;
  • Introduce a strategy for Ireland that includes the principles of the circular economy and cradle-to-cradle development;
  • Introduce shadow national accounts, and assign value to natural capital and ecosystems in our national accounting systems;
  • Develop a comprehensive mitigation and transition programme to support communities and people in the transition to a low carbon society;
  • Develop a progressive and equitable environmental taxation system;
  • Develop a new National Index of Progress encompassing environmental and social indicators of progress as well as economic ones;
  • Develop a Just Transition Dialogue structure at regional and national level.